Article Abstract:
The US Federal Reserve aims to warn consumers not to increase borrowing because stock prices have risen, and reduce the froth levels of the stock market, according to Greenwich Nat West. The Fed may still keep rates stable unless there is an additional acceleration of credit growth. US interest rates are already high in real terms, and corporate profits and net exports are likely to be affected by the Asian crisis. Labor costs do not appear to be causing inflationary pressure. Rates are only likely to rise if equity markets do not react to the warning of higher rates.
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Article Abstract:
US share prices could continue to rise, according to Goldman Sachs. US companies are continuing to report profits growth, and inflation is unchanged despite economic growth. Three factors could affect share prices in the short term. Earnings have been above average, but the election could affect prices if Bob Dole's tax reduction plans were likely to be implemented. Interest rates may rise, but they are not expected to be raised by much, and bond markets have already taken a rise into account.
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Article Abstract:
US share prices have been affected by concern over interest rate rises, in addition to worries of worsening earnings forecasts. US interest rates could be increased on May 20 1997. Lower earnings could result from a rise in interest rates. Share prices have dropped more rapidly than bond prices. There is especial concern about US wage inflation which could hit both corporate earnings and mean that interest rates are more likely to rise.
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